A comment on the optimal structure of export processing free zones
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This article comments on the industrial structure of developing countries’ export processing free zones (EPZ). As developing countries are exposed to irrecoverable entry costs in international markets, the relationship between export supply and exchange rates has been shown to be persistent. In addition to hampering entry, the market entry costs thus complicate export supply responses. As the form of persistence varies between industry structures, market entry costs might also affect EPZ optimal industry structure. In order to create successful export promotion programs through EPZ, these differences should be taken into account. This paper comments on how different export industry structures create export revenues and backward linkages, two of the main objectives of EPZ.
SeriesArbeidsrapport (Høgskolen i Østfold)